tv [untitled] April 30, 2013 12:30pm-1:01pm PDT
number two, to describe the nature of each property, to see whether it fits within certain definitions for sale or not sale, or there is a reason to keep it irrespective of whether the value is going to increase. and i think those are very robust discussions. and you've raised some legitimate issues. and i think that we need to sit down and have a face to face chat about that that reflects our issues as well as yours so there is a meeting of the minds here. consensus is always a good thing, but you can't have consensus if one party is not speaking to the other. all right. we'll move on. >> so, that concludes my -- >> is that was it? >> yes. >> simple. ~ >> all right. any public comment on the general manager's report? all right. there being none, we'll move to item number 8. bawsca. >> good afternoon, mr. president and members of the commission. >> good afternoon.
>> art chancing with bawsca. i wanted to start by addressing something commissioner moran raised regarding the water supply agreement update. it references the june presentation of this commission about our working on water supply management -- future water supply management issues. i look forward to that discussion with you. it doesn't necessarily relate to provisions of the agreement, although there are some that relate to that. steve ritchie and i have begun working on how we might choreograph a presentation to you. that will go on in the next several weeks once he gets back to japan. we are working on it and look forward to it. the second item commissioner moran referenced was rate structure. todd and i discussed that yesterday. we had hoped to do some work, preliminary work on that this fiscal year.
our time was consumed with the preparation issuance of the bonds so we did not make headway we had hoped. and it is something that did appear on the list of item that we presented to our board last month, as we presented our preliminary budget, work plan and budget to them. and we said -- we had some financial constraints. and we said, this is an issue that would be of great benefit to the wholesale customers to coordinate with san francisco on the assessment of what rate structures might be, what alternatives might make sense for both parties. however, it is not as vital to the success of our agency as a number of other issues that are very critical and very time intensive. so, we have not budgeted time to work on that this coming year. were i to be staying on, we would try to fit something in in some manner, but i suspect there is going to be a period of
delay in our own work plan as we budget. we'll have to accommodate as we go through our mid-year budget review. so, i don't think we're going to get to this in time for a product that would affect rate structures next year. i will leave behind the proverbial envelope in the desk drawer for the next victim and say, this is one of those things that you should attend to, because it is important. for example, when mr. harrington addressed our board before, just before he left, he said rate structure issue is an important one. from the wholesaler's perspective, he said maybe volume metric charges are wrong. maybe it should be based on the individual supply guarantee, which would make it entirely fixed, a fixed charge, not billing metric at all. in other words, each agency, almost every agency has some contractual capacity that they have contracted with you for, it would be based upon that. that doesn't change from year to year, and that would be a
fixed charge. that would put a tremendous burden on the wholesale customers to either absorb changes in revenue based upon their volumetric charges or go to a fixed charge themselves. ~ and that's the issue. i think intellectually it's one of the most challenging things we could get together and grapple with, but done separately it's a disaster. it needs to be thought through. so, i wish that we could deliver something before the commission for the customers within the next year. i just don't know that that's realistic, so, that's my comment on that. i do want to share with you a comment on an item that's coming up later in the agenda. i want to get the drop on it, so to speak. that is in our comments on the wsfp update, we suggested that the commission look at alternative ways to manage a cash flow problem. one of the ways we cited was to change the method of funding
for the watershed environmental group and program. bad idea. i reached out to one of of our environmental colleagues and discussed it with them. they were open. maybe they had concerns. what i've heard back is there is a great deal of concertificate nation. we do not want to see that program gutted, thrown out of the water, destroyed, verbs, that is not our intent or desire. forget we mentioned it. ~ we do think that it's important to look at other alternatives for management to look at, but it doesn't have to be that one. finally, you've all received an invitation to our may board meeting where we will among budgets and contracts among other thing, celebrating our 10 years of existence as an agency. some of you said you won't be able to attend. we would be grateful to any of you that can afford to spend the beginning of that evening with us down there. and i look forward to your presence if you're able to. thank you very much.
>> any comments? any public comments? there being none, we'll move to item number 9, revenue bond oversight committee annual report and audit findings. >> commissioners, joe [speaker not understood]. my name is kevin chang. i'm the chair of the revenue bond oversight committee. and this is probably one of the 11th or 12th presentation that we've done before this body as part of our annual report for planning and oversight committee. and it is my first. so, i want to thank you for the opportunity to speak today. our committee meets monthly in a public setting. we take public input. we review in detail all the capital programs [speaker not understood] program, and eventually other bond funded
programs such as [speaker not understood] may be power generated related. in our meetings we've heard from a number of interested bodies and also members of the public and be able to take that feedback in our evaluation of all these projects. what i'd like to do today is review in a little more detail the most updated information we have on the status of whatctionv the wsip program will be on time and on budget which is a primary concern for all bodies concerned, as well as whether or not there is any anticipated additional charges that may not have been accounted for within the [speaker not understood] budgetary process. we engaged a [speaker not understood] firm as part of our purview as an oversight committee to take on that in-depth review. what we found out thus far, and [speaker not understood] a detailed report we present to this body and the public as well as in today's packet.
what we've engaged this consortium to do is look at those two questions as part of two major review tasks. in our first task we determined overall whether or not the program would be on time, on budget. we drill down heavily into five major projects which constitute about $1.5 billion or about a third of the total program costs as a way of getting a more in-depth view overall of the program without having to look at every single project. our evaluation determined through the consulting firm [speaker not understood] that some programs will be on time and on budget and some will not. where we looked most heavily at the ones that will not be on time, on budget, two types of projects come out as representative of why they will not come in on time and on budget.
those ones are difficult sites, terrain physically is difficult to build in and hence it was not anticipated there were additional costs and time delays that are associated with it. another one is challenge of working in both a challenging site and the challenge of working with a difficult contract partner. the most important thing to come out of the study is the program, due to one project, calaveras dam replacement, will cause the overall dam to be late and will cause the overall program to be over budget. however, if you were to remove that project, that project due to its unique geologic circumstances were taken out of the total program, overall, all programs will be on time and on budget. that's good to know. it's interesting to know, it is important to know. and it allows for staff and this commission to weigh more heavily where the areas of potential need to be paid in
order to stay on time and on budget. >> on that point you raise the issue of a difficult contract partner. what does that mean? >> there are two other projects. the calaveras dam from oured r he understanding from independent review and also program staff ~ is that that partner is actually a good partner. they've had actually built relations, they've had a collaborative cooperative process in which they engage to change orders and the challenge s due to the difficult geological terrain. it is more difficult to build the dam on a site because of geological reasons. the other two factors which i can go into in more detail, were due to a partner that -- a contract partner -- and i think staff can go into it in more detail. from our understanding was basically initiating a number of change orders that may or may not have been founded. and through that challenge of
whatnot, requiring for additional information, requiring for additional attempts at trying to change what they can bill for, that made it difficult to actually solve the problem and try to figure out what the total overall budget. >> a difficult partner implies increasing the cost will not necessarily justify it. >> that depends whose perspective that is. the contractor will say that is actually quite fair. staff may see otherwise. we have an independent body are trying to look at it independently of whose perspective that is. >> on those two other projects where you have found difficult contract partners, ~ you have conclude that had staff was correct? >> we concluded that because it is a difficult partner relationship with the correcter, obviously it's going to be a challenge to get on time and on budget. >> so, how would you recommend dealing with these kinds of issues in the future? >> that's an interesting question. we're taking the best practices from these types of studies and applying it to csip. wsip, we are towards the
maturity stage of where these types are being completed. we can't swap out a partner. i think that would be very difficult. it would be actually mission uncritical to do so. it will actually jeopardize the o & r program to do so. i think what we can do is take -- if [speaker not understood] select the partner, this particular contract, maybe if they came in with the lowest bid, but made the low bid did not account for the fact there would be other challenges. but given the public bidding environment, that may be a challenge how we actually do that. nonetheless, i think the answer is we need to take those lessons and a reapply them especially since csip is fundamentally larger and more extensive program than wsip. >> can i add something? one of the things that we did really take in consideration, we did pre-qualification where we looked at, you know, claims and things like that. although you identify, you know, a contractor that you feel
through the pre-qualifications, they actually -- you entertain the most responsive -- responsible bid -- bidder and we do partnering, we do all these things. but it's not 100%. and i think we are experiencing a contractor that maybe financially had some incentives to try to maximize changes and stuff like that. and, so, that's why we have our staff to minimize it. so, i think those are the challenges that your -- partner that you're referring to. >> right. >> even when we looked at the actual change orders, vis-a-vis the contract tool bid, it's not like they try to double the contract bid. it's a percentage and it's a marginal percentage at that. and the base question, why have such a difficult relationship when actually the net value to either the contractor or the program cost is so minimal, it may be helpful. that's a different type of challenge than, let's say, somebody that is brought in through purely contract terms.
i think the contract language can be placed that will prevent a lot of spinning of the wheels here, quite frankly, to try to get what the contractor ultimately wants, which is a bit of money for the deal. getting back to the overall program, i think staff would give more detail about exactly where, when, and how build out program will be readjusted, given these project challenges. the actual detail report is given here. i can go into details of the report. i think the next question that is more germane is will there be additional anticipated deliberate costs aside from the actual capital costs from the overall program. when those costs are what we call soft costs. [speaker not understood]. if you look at page 11 of the presentation, program deliberate costs are things you
probably can imagine such as project management, environmental review design, these are up front that can lead into the overall delivery cost as the program -- as the project is not closed out. but it's the other overhead costs that can drive unanticipated out of budget costs. that's where staff is paying particular attention. and the fact the baseline for some projects have to be readjusted to accommodate some of these more challenging projects to looking at the soft costs as the area which we need to both contain if possible achieve savings. ~ and if possible that is an area we asked staff with help with the consultant to identify the areas where they can actually contain the cost and hopefully achieve some degree of savings against what was originally the budget. those areas of opportunity have been identified. they are in the process of being implemented.
what with rbac would do over the next 6 and 12 months is to dive deeply into those key areas that drive the majority of savings that are needed in order to bring in into alignment where the adjusted baseline of the budget will be. and we anticipate to actually go through into that. and with all the additional consulting help, to be able to bring back an answer to both the puc, the board, as well as the public around the areas of whether or not we will indeed have these costs contained and the savings achieved that are being identified by staff currently. we make a number of recommendations. i think we will continue to make recommendations to staff. i think we have a very good rbac and staff have a good working relationship where when challenging questions are presented, staff are quite forthright and quite forthcoming in how they present those answers and we've made a
number of suggestions around where we can contain the cost, ensure accuracy around the budget, and where the baseline will be. and more importantly, be able to fulfill our own site responsibilities per proposition. so, therefore, i think that we'll come back to this body again either [speaker not understood] annual report or sooner if this body deems it necessary so that we can report where [speaker not understood] baseline has been adjusted, how accurate we are, and on time and on budget with the new baseline, and also with the additional anticipated costs will be contained as anticipateded. >> any questions? i just want to thank you, mr. chairman, for your hard work and please relay our gratitude to the other members of the committee ~ for authorize work. >> thank you. >> appreciate that very much. >> thank you. >> public comments on the revenue bond oversight committee annual report and audit findings? there being none, we'll move to the consent calendar.
are there any items that members want to remove? there being none, yes, mr. poe. there are a number of items. he wants to speak on five items. >> on the consent calendar, it's 10 a, c and d. actually, it's just a general comment that pervades some of the other items. i've spoken before about environmental review with respect to the environmental review of those three items. and i believe elements of 11 and 12. there is reference in the cover page about the determination of environmental review, but there's no attachment and the resolutions make general reference without, in some cases -- well, there is data in one case, but not the city planning file number. when i try and chase down the environmental review documents it proves very difficult. as the board of supervisors is
considering both the wiener and kim legislation to change chapter 31 of the admin code, i think it would be good for us to get ahead of that and to either list as attachments those documents where they're short, or at a minimum, to include the city planning item number and information where someone can find those determinations. i just think it pulls together the environmental review aspect of these projects. i'm not suggesting that the staff has done anything wrong. i just think that this is a piece that [speaker not understood] group can deal with. this really wasn't with respect to the fundamental calendar items. >> so, you've communicated those concerns to members of the staff? >> i have started to. arena is not here so i can't communicate that to her. i can certainly talk to [speaker not understood] and see that that -- and michael to see that that happens. >> mr. carlin, mr. cruz? >> yes, mr. carlin, mr. cruz.
>> for the record, make sure we know who we're talking about. >> i appreciate that, president torres. >> all right. any other questions? >> thank you. >> we'll see you back in a minute. any further public comments? commissioner? >> i have a question, i don't want to remove it, 10 a. . >> 10 a. ~ i just want to understand the nature of that project. i do know we are doing some pilots, community garden pilots, and i'm not sure who should answer [speaker not understood]. is this going to be something that we're really -- as part of our pilot process, to activate public land for public purpose? is there going to be sort of a documenting and monitoring of this program and project and how did it come about? >> good afternoon, [speaker not understood], real estate director. this project came to my attention from the mayor's office, which is sponsoring a revitalization of ocean and phelan avenue. it's called the project is called the ocean-phelan loop. ~
so, it's a revitalization of different store front and the community garden was actually in place when i was hired. so, i went out and inspected it and it's a very small group of people with a very small plot of land, 4,000 square feet. it corrects an area, i don't want to use the word light, but could use some scenery. so, we decided to grant the permit. but this is not part of what [speaker not understood]. >> great. i'm all for it. >> so, when are they going there? >> [speaker not understood]. >> when? >> yes, i haven't been out there in a year. >> i thought it was sustainable food products, but no. >> are they edibles, are they for sale? >> i can get back to you on that. i think they're just plants. [multiple voices] >> or just garden. i think it's just a garden. >> decorative element for the area. >> yes, decorative element. >> great, thank you.
>> you're welcome. >> any other question on any item on the consent calendar? >> i'd like to move the calendar. >> thank you. second? would be grateful, second. all those in favor signify by saying aye. >> aye. >> all those opposed? motion carried. all right. we're on to the regular business and i'd like to ask mr. cruz and -- to come forward on item 11. >> item 11 is a public hearing: discussion and possible action to approve the project-level scope, schedule and budget of the march 2013 revised water system improvement program and direct staff to send a notice of change report to the california joint legislative audit committee, the california department of public health and the california seismic safety commission in compliance with california assembly bills 1823 and 2437, and authorize the general manager to seek board of supervisors' approval for the re-appropriation of existing funds as needed and the supplemental appropriation of $54,927,412 in new funding. >> right, ms. labonte, i think you're part of this presentation as well. >> yes. ~ mr. >> ladies and gentlemen, [speaker not understood]. by way of introduction i'd like to take [inaudible] and actually acknowledge the people that have worked on the wsip program. taking your advice, mr. president, i'd like to toot our own horn on this particular program. >> good.
>> programmatically, we're over 70% through the program. as the oversight committee report stated, if we take out one of the programs or one of the projects within the program that had an unforeseen underground site condition, one of the most challenging types of projects to do which is an earth ban, the entire program would be under budget, having spent over 70% to that point. and that i think is a tribute to mr. kelly's leadership when he held my position and mr. labonte's direction as a program director. ~ having said that, we have completed negotiations on the calaveras dam change order with the contractor. so, we've completed the negotiations on the hard dollar costs associated with that change. and based on that, we believe it is an appropriate time to come back, update you on where we stand and put forward for your consideration for revision to the overall programmatic budget and schedule. given what we know, given the fact that we've completed negotiations, we were actually making specific recommendations on how to move forward with the
program in its completion from a budgetary and schedule perspective. it has been suggested that we should present options to you, colluding the option of doing nothing. at this point it is our recommendation that we have enough information to layout a course of action to present to you for your consideration today at the end of which obviously, if you have any questions, we can go into more detail. but the detailed presentations will be made by ms. labonte. and if you have any questions for either of us when she's done, we'll be here. >> thank you. ~ >> good afternoon, commissioner -- let me switch. does this one work? yes, okay. i'll be closer to the computer here. so, this is a public hearing for the consideration of revisions to the water system improvement program. and as a whole, these revisions are referred to as the march 2013 revised wsip. your packet today includes
several documents that support our request to revise the program, and also included in the commission packet is a letter from bawsca dated april 17th, which includes comments on our proposed wsip provisions. so, why is it that we have to revise the program? it is not unusual for a program of this complexity to go through revisions periodically. as project moves through the various phases of pre-construction and then into construction, new information becomes available and new challenges are also oftentimes encountered in the field. revisions to our schedule and budgets then need to be done to incorporate this latest knowledge understanding and analysis. these revisions also allow us to identify some of the project savings that can be used to compensate for project overruns. and despite the fact that we
have identified a number of savings on several projects, the current approved wsip budget is inadequate. so, with revisions to that budget must be made so we can secure the funding required to complete all our projects. the california water code also requires that we seek your approval for schedule revisions when schedule delays cannot mitigate it. so, doing nothing about our budget shortfalls means that at some point eventually we would run out of funding and would have to stop some of our projects in the middle of construction. in our view, this is an irresponsible approach as abandoning projects during construction could expose us to liabilities associated with early termination of construction contract. also, given the fact that we only have three projects in pre-construction, we have very limited options of cutting projects before they transition into construction. this is also an option that we
believe is undesirable. keep in mind that if we were to do nothing or cut any projects, we will no longer be able to achieve the los goals that were established for the system. now, the proposed revisions that are before you today are the culmination of the two-month comprehensive review of all our active projects. that assessment involves active participations from all our project teams. many of the infrastructure division top managers as well as aecom, our program construction management consultant. the assessment to a great extent focuses on three kia expect of the programs, construction costs, delivery costs, and project schedules. all our project managers were required to justify all proposed revisions and final review meetings that were attended by key members of the wsip management team including myself. as mentioned, the progress has
been made on the program to date, especially in recent year. as a whole, the program is not 72% complete based on expenditures to date and this is a percent completion that is measured against the proposed budget if we were to measure against the lower current budget that is in completion with the over 75%. we have completed construction on 60 of the wsip 82 projects and records of our monthly man-hours she we past the peak of construction this past august. only three projects remain in construction. two of those are water supply project and one is a seismic reliability projects. now, the next three slides, we provide a snapshot of what has been accomplished in the program over in recent years. starting with our treatment projects, construction has been
completed and all the projects that are highlighted in blue and construction has yet to start or is ongoing on the projects highlighted in green. so, you can see here that we have completed construction on two of the four treatment projects and with construction being now 98% complete of the slope plant, before long we will only have remaining work at the harry tracy water treatment plant. construction has been completed on four of our six storage projects, as indicated here, the calaveras dam project is now 39% complete. ~ the regional groundwater storage project is one of the three projects remaining in pre-construction and it is now in the later stage of design and environmental review. [speaker not understood] progress has also been made on all our transmission projects as indicated by the amount of blue on this slide. all these completed projects have already added significant delivery to the seismic and
delivery reliability of our system. five transmission projects with significant seismic delivery reliability -- seismic reliability objectives remain, and you can see here on this slide our two ongoing tunnel projects are the only two remaining segments needed to complete the new life line being built around the bay. and the new tunnel there is 79% complete, while the bay tunnel is slightly further ahead at 81% complete. so, shown here is a high-level summary of the changes proposed as part of the march 2013 revised wsip. major scope changes are proposed on two projects. the scope changes on the calaveras projects are due to the deferring geological conditions discovered in mid 2012, while a different and simpler design concept is being proposed for the alameda creek recapture pr